Private Equity Holding (PEH), the ailing listed private equity investment management firm based in Switzerland, has resolved its short-term liquidity crisis following Swiss Life’s decision to defer repayment of a SFr325m (E220m) credit facility.
In a statement, PEH said the extended facility, originally due to expire on March 10, would provide the company “with the necessary time to find a solution for its financing needs which is in the interest of the company and its shareholders.”
A SFr350m credit facility was fully drawn by the end of 2002. The credit facility was governed by several covenants, one of which required a three-fold over-coverage of the loan with selected assets held by Private Equity Holding. In early January, Private Equity Holding repaid SFr25m to Swiss Life in order to remain in compliance with the covenants. At the same time the private equity group committed itself to presenting an acceptable proposal to Swiss Life on the early repayment of the outstanding balance of the loan.
Alternative options for PEH include a refinancing of the Swiss Life credit facility,
a securitisation of a portion of its investments or the sale of portfolio participations. However, the company said the latter was not favoured as any sale would be at a significant discount to current value.
In its most recent report for the year ended
In the three months to
The firm has attributed its current plight to “difficult market conditions, lower valuations of portfolio investments, disproportionate commitments made in the past and a low level of distributions.”
Swiss Life Private Equity Partners took over management of Private Equity Holding, which listed on Swiss Stock Exchange in 1999 in July 2001, overhauling the firm’s operations. The firm says that it has also completed a re-assessment of the portfolio, which currently comprises 84 fund investments and 37 direct investments.